1. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 1 Why Innovation Matters Technology Cycles Innovation Streams 1 1

2. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 2 Why Innovation Matters 1900-1910  airplane, plastic, air conditioner 1911-1920  mammogram, zipper, sonar 1921-1930  talking movies, penicillin, jet engine 1931-1940  radar, helicopter, computer 1941-1950  atomic bomb, bikini, transistor 1951-1960  DNA, oral contraceptive, Tylenol 1961-1970  video recorder, handheld calculator, computer mouse 1971-1980  compact disc, gene splicing, laser printer 1981-1990  MS-DOS, space shuttle, CD-ROM 1991-2000  taxol, Pentium processor, Java 2001-Today  mapping of human genome, first cloning of human embryo Adapted from Exhibit 7.1 1 1

3. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 3 Technology Cycles Technology Cycle A cycle that begins with the “birth” of a new technology and ends when that technology reaches its limits and is replaced by a newer, better technology. 1.1

4. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 4 S-Curves and Technological Innovation Effort Performance Discontinuity New Technology A B C Adapted from Exhibit 7.2 1.1

5. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 5 Innovation Streams Patterns of innovation over time that can create sustainable competitive advantage. 1.2 Technological Discontinuity A scientific advance or unique combination of existing technologies that creates a significant breakthrough in performance or function.

6. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 6 Innovation Streams: Technology Cycles over Time Adapted from Exhibit 7.4 Era of Ferment (1) Era of Ferment (1) Variation Selection Technological Discontinuity (1) Technological Discontinuity (1) Dominant Design (1) Dominant Design (1) Era of Incremental Change (2) Era of Incremental Change (2) Era of Ferment (2) Era of Ferment (2) Variation Selection Technological Discontinuity (2) Technological Discontinuity (2) Dominant Design (2) Dominant Design (2) Technological Substitution Era of Incremental Change (1) Era of Incremental Change (1) 1.2

7. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 7 Innovation Streams 1.2 Discontinuous Change Dominant Design Technological Discontinuities Technological Substitution Design Competition

8. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 8 Managing Innovation Managing Sources of innovation Managing During Discontinuous Change Managing During Incremental Change 2 2

9. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 9 Managing Sources of Innovation 2.1 Creative work environments Workplace cultures in which workers perceive that new ideas are encouraged Flow The psychological state of effortlessness in which you become absorbed in your work and time seems to pass quickly

10. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 10 Components of Creative Work Environments 2.1 Adapted from Exhibit 7.5 Creative Work Environments Challenging Work Work Group Encouragement Lack of Organiz. Impediments Supervisory Encouragement Organizational Encouragement Freedom Flow

11. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 11 Innovation Environment  Structural Variables  Adopt an organic structure  Make available plentiful resources  Engage in frequent interunit communication  Minimize extreme time pressures on creative activities  Provide explicit support for creativity

12. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 12 Innovation Environment  Cultural Variables  Accept ambiguity  Tolerate the impractical  Have low external controls  Tolerate risk taking  Tolerate conflict  Focus on ends rather than means  Develop an open-system focus  Provide positive feedback

13. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 13 Innovation environment  Human Resource Variables  Actively promote training and development to keep employees’ skills current.  Offer high job security to encourage risk taking.  Encourage individual to be “champions” of change.

14. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 14 Doing the Right Thing 2.1 Give Credit, Don’t Take It  Stealing others’ ideas wrong, AND  Nothing kills a creative work environment faster So…whether or not you’re the boss, give credit where it’s due. Give Credit, Don’t Take It  Stealing others’ ideas wrong, AND  Nothing kills a creative work environment faster So…whether or not you’re the boss, give credit where it’s due.

15. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 15 Managing Innovation During Discontinuous Change Experiential approach to innovation  innovation is occurring within an uncertain environment  the key to innovation is to use:  intuition  flexible options  hands-on experience 2.2

16. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 16 Experiential Approach to Innovation Parts of Experiential Approach MilestonesMilestones Design Iterations TestingTesting Multifunctional Teams Powerful Leaders 2.2

17. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 17 Managing Innovation During Incremental Change  Compression approach to innovation  assumes that innovation is a predictable process that can be planned in steps  Generational change  based on incremental improvements to a dominant technological design and achieving backward compatibility with older technology 2.3

18. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 18 Compression Approach to Innovation Parts of Compression Approach Shortening Time of Individual Steps PlanningPlanning Supplier Involvement Overlapping Steps Multifunctional Teams 2.3

19. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 19 Adapted from Exhibit 7.6 2.3 Experimental Approach Compression Approach Environment Goals Approach Steps Uncertain discontinuous change: technological substitution and design competition Certain incremental change established technology (i.e., dominant design) Compress time/steps needed to bring about small improvements Planning Supplier involvement Shorten time of steps Overlapping steps Multifunctional teams Build something new, different, and better Design iterations Testing Milestones Multifunctional teams Powerful leaders Managing Innovation Speed Lower costs Incremental improvements in performance of dominant design Speed Performance Improvements New dominant design

20. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 20 Five Stages of Organizational Decline Blinded Inaction Faulty Action Crisis Dissolution 3 3

21. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 21 Managing Change 4 4 Resistance Forces Change Forces ChangeChange

22. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 22 Forces for Change  External forces  Marketplace  Governmental laws and regulations  Technology  Labor market  Economic changes  Internal Forces  Changes in organizational strategy  Workforce changes  New equipment  Employee attitudes

23. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 23 Managing Change Managing resistance to change Managing resistance to change 4 4 What not to do when leading change What not to do when leading change Different change tools and techniques

24. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 24 Managing Resistance to Change Unfreezing Change Intervention Refreezing Share reasons Empathize Communicate Benefits Champion Input Timing Security Training Pace Top management support Reinforce 4.1

25. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 25 Managing Resistance to Change  Why People Resist Change?  The ambiguity and uncertainty that change introduces  The comfort of old habits  A concern over personal loss of status, money, authority, friendships, and personal convenience  The perception that change is incompatible with the goals and interest of the organization

26. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 26 Managing Resistance to Change Education and Communication Participation Negotiation Managerial Support Coercion 4.1

27. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 27 Errors Made when Leading Change 4.2 Adapted from Exhibit 7.8 Unfreezing 1.Not establishing a great enough sense of urgency. 2. Not creating a powerful enough guiding coalition. Change 3. Lacking a vision. 4. Undercommunicating the vision by a factor of 10. 5. Not removing obstacles to the new vision. 6. Not systematically planning for and creating short-term wins. Refreezing 7. Declaring victory too soon. 8. Not anchoring changes in the corporation’s culture.

28. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 28 Change Tools and Techniques Results-Driven Change General Electric Workout Transition Management Teams Organizational Development 4.3

29. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 29 Results-Driven Change Adapted from Exhibit 7.9 1.Create measurable short-term goals to improve performance 2. Use action steps only if likely to improve performance 3.Stress the importance of immediate improvements 4. Consultants and staffers should help managers achieve quick improvements in performance 5.Test action steps to see if they yield improvements 6.It takes few resources to get results-driven change started 4.3

30. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 30 General Electric Workout 1. Boss discusses agenda and targets specific business problems, then leaves 2. Outside facilitator works with teams, who debate solutions 3. “Town Meeting”  teams make suggestions  boss must decide on the spot— agree, say no, or ask for more information Day 4.3

31. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 31 Transition Management Team  A team of employees whose full-time job is to manage and coordinate change  Anticipate and manage employee reactions to change  Work with the CEO to…  decide on change projects  select and evaluate people in charge  make sure change projects are complementary 4.3

32. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 32 Transition Management Team 1. Establish a context for change and provide guidance. 2. Stimulate conversation. 3. Provide appropriate resources. 4. Coordinate and align projects. 5. Ensure congruence of messages, activities, policies, and behaviors. 6. Provide opportunities for joint creation. 7. Anticipate, identify, and address people problems. 8. Prepare the critical mass. Primary Responsibilities of TMT Adapted from Exhibit 7.10 4.3

33. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 33 Organizational Development  A philosophy and collection of planned change interventions  Designed to ensure organizations long-term health and performance  Change Agent  the person formally charged with guiding a change effort  can be an internal or external person 4.3

34. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 34 Organizational Development Adapted from Exhibit 7.11 1. Entry 2. Startup 3. Assessment and Feedback 4. Action Planning 5. Intervention 6. Evaluation 7. Adoption 8. Separation General Steps for Organizational Development Interventions 4.3

35. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 35 Kinds of OD Interventions Adapted from Exhibit 7.12 4.3 LARGE SYSTEM INTERVENTIONS Sociotechnical systems Survey feedback SMALL GROUP INTERVENTIONS Team building Unit goal setting PERSON-FOCUSED INTERVENTIONS Counseling/Coaching Training

36. Chapter 7 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 36 What Really Works Changing the Work Setting 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 55% Changing the People 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success57% Changing Individual Behavior & Organizational Performance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success76% Change the Work Setting or Change the People?